Stupid State Tax Tricks
Low taxes does for national economies (see US performance versus Europe and certain European countries like Ireland against other European countries like Germany) as it does for state economies.
In the WSJ, writers Lawrence McQuillan and Hovannes Abramyan compared the tax rates in the 50 states and write in 'Live Free or Move' :
In 2005, per capita personal income grew 31% faster in the 15 most economically free states than it did in the 15 states at the bottom of the list. And employment growth was a staggering 216% higher in the most free states. It hasn't been a "jobless recovery" in states that have adopted pro-growth tax and regulatory policies.
But the tax hike governors like John Corzine see budget problems believe that raising taxes will increase their revenues. Supply-side economics proves Corzine wrong again.
In 2005, the 15 states with the most economic freedom saw their general fund tax revenues grow at a rate more than 6% higher than the 15 least free states, despite their lower effective tax rate. Instead of blowing a hole in state budgets, lower tax rates rewarded productivity and risk-taking and allowed the economy to grow. As the economy expanded it also generated more revenue for the state Treasury as capital and people flowed in. Census data shows an astounding 245% difference in net state-to-state migration rates in 2005 between the freest states (net inflow) and least-free states (net outflow). "Live Free or Move" is fast becoming the national motto.
California as the highest marginal tax rate in the country. Phil Angelides is a candidate who vows to raise that rate from 10.3% to 12%. Let's hope he wins and we can revisit their economic perfomance a few years later. It is no fun to watch stupidity in action. I live in Jersey.